Across the country, home buyers are waiting for the fall in real estate prices at least by 10 percent in another 6 months and are ready to wait for another year to buy property. In a recent study by IIM Bangalore and Magic Bricks indicates that the specialized discounts and offers given by the builders and developers in this festive season have failed to attract buyers.
The Housing Sentiment Index (HSI) plays a vital role in measuring the economy of the nation. The Housing Sentiment Index (HIS) is measured in terms of Diffusion Index Methodology, where an HSI of 100 indicates a The survey results in the past two quarters show that the cumulative in Q3 2013 has dropped to 93 from 117 in Q2 2013, which is almost a fall by 20 percent. An HSI of 100 indicates neutral and a number above 100 signifies that buyers vote in favor of price increase and a number below 100 shows that that buyers vote in favor of price decrease. The survey results in Bangalore HIS shows 106, which indicates buyers in Bangalore expect prices to increase slightly.
The study also shows that the percentage of buyers who expected fall in real estate prices by 10 percent have increased their expectation of real estate prices by 25 percent whereas it was only 14 percent in the previous quarter. Almost one-third of respondents are willing to wait for a year to buy property, which is really not a good sign in the real estate industry where unsold units have piled up.
According Liases Foras, a property research firm by the end of the June 2013, the total unsold inventory across the country was 670 million sq. ft. The National Housing Bank’s (NHB) residential housing index, Residex also reported that 22 out of 26 cities have observed a decline in home prices in the third quarter and prices are expected to fall further.
Mr. Sanjay Dutt, executive managing director of South Asia at real estate services firm Cushman & Wakefield said that the buyers wait will end very soon and the opportunity to buy property at good price would knock their doors in next monsoon with the results of elections.
Professor Venkatesh Panchapagesan of IIM Bangalore said that buyers wait and watch tactic could force developers’ to cut prices in order to clear their inventory in the festive season.
The study also revealed that though the ROI across the country fall, Bangalore Real Estate Market remains unharmed with an HSI of 106 though buyers expect slight increase in real estate prices. Other cities like Mumbai recorded the lowest HSI score of 81, Hyderabad to 83, a drop of 30 percent due to Telangana crisis.
